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What is Dual Aspect Concept in accounting ?

The Dual Aspect Concept : Dual Aspect Concept, also known as Duality Principle, is a fundamental convention of accounting that necessitates the recognition of all aspects of an accounting transaction. Dual aspect concept is the underlying basis for double entry accounting system. Explanation In a single entry system, only one aspect of a transaction is recognized. For instance, if a sale is made to a customer, only sales revenue will be recorded. However, the other side of the transaction relating to the receipt of cash or the grant of credit to the customer is not recognized. Single entry accounting system has been superseded by double entry accounting. You may still find limited use of single entry accounting system by individuals and small organizations that keep an informal record of receipts and payments. Double entry accounting system is based on the duality principle and was devised to account for all aspects of a transaction. Under the system, aspects of tran...
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What is Cost Concept in accounting ?

The Cost Concept : According to the Chartered Institute of Management Accountants, cost is “the amount of expenditure (actual or notional) incurred on or attributable to a specified thing or activity.” Similarly, according to Anthony and Wilsch “cost is a measurement in monetary terms of the amount of resources used for some purposes.” Cost has been defined by the Committee on Cost Terminology of the American Accounting Association as “the foregoing, in monetary terms, incurred or potentially to be incurred in the realisation of the objective of management which may be manufacturing of a product or rendering of a service.”
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What is Accounting Period Concept ?

The Accounting Period Concept : During the accounting period, a company gathers and organizes its financial activity. This is used to create financial statements at the close of the accounting period. The accounting period can be considered as the time taken to complete an accounting cycle of the business. Since the accounting cycle records transactions over a period of time and reports them in the form of financials, one accounting cycle equals one accounting period. The cycle begins the financial books at the beginning of each period with reversing entries and closes the books at the end of a period with year-end closing entries. To complete this cycle, businesses must prepare the financial statements before the start of the next accounting period. What Is an Accounting Period? An accounting period is the time frame for which a business prepares its financial statements and reports its financial performance and position to external stakeholders. This could be ...
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What is Going concern Concept in Accounting?

The Going Concern Concept : Entity is considered a going concern if it is considered capable of continuing its operation for the foreseeable future and is not expected to go out of business unless an evidence proves otherwise. In simple words entity is a going concern if it is expected to: remain capable to carry out its routine business activities i.e. use and consume its assets for the intended purpose i.e. extract their utility by using them to convert raw material or provide intended services, can plan activities and implement them, pay its obligations at the agreed time. Going concern concept is also called continuing concern concept. Whether entity is a going concern or not is judged by analyzing the likelihood and significance of factors and situations that can compromise entity’s abilities to continue its activities. An entity that is losing or no longer a going concern can recover if it can take safeguarding steps in time to avoid circumstances that are threa...
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What is Money Measurement Concept in Accounting?

The Money Measurement Concept : Money Measurement Concept is one of the concepts of the accounting according to which company should record only those events or transaction in its financial statement which can be measured in the terms of money and where assigning of the monetary value to the transactions is not possible then it will not be recorded in the financial statement. “ Any transaction which can be measured in monetary value and are relevant to business transactions, will be recorded and anything otherwise will be left out of the records.” The concept suffers from two major limitations : Transactions and Events that cannot be measured in money terms are not recorded, howsoever important they may be to the enterprise. For example, human resources with the enterprise are important to the enterprise but are not reflected in the financial statement because their worth can not be measured and expressed in money terms. The yardstick of measurement, i.e., money is conside...
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What is Business Entity Concept in Accounting?

The Business Entity Concept : The business entity concept (also known as separate entity and economic entity concept) states that the transactions related to a business must be recorded separately from those of its owners and any other business. In other words, while recording transactions in a business, we take into account only those events that affect that particular business; the events that affect anyone else other than the business entity are not relevant and are therefore not included in the accounting records of the business. This concept is very important because if transactions of a business are mixed up with that of its owners or other businesses, the accounting information would lose its usability. The business entity concept of accounting is applicable to all types of business organizations (i.e., sole proprietorship, partnership and corporation) even if a law does not recognize a business and its owner as the separate entities. Importance/need of business enti...
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Type of Accounting Concept

                            Accounting Concept Accounting concept are the basic assumptions or fundamental propositions concerning the economic, political and social environment within which accounting operates. they are generally accepted set of accounting rules based on which transaction are recorded and financial statement prepared. It is important to follow these rules because it will enable the user to understanding the financial statement of the enterprises better, which otherwise would become difficult if not impossible.   Following are the various accounting concepts that have been discussed in the following sections : The Business Entity Concept The Money Measurement Concept The Going Concern Concept The Accounting Period Concept The Cost Concept The Dual Aspect Concept The Revenue Recognition Concept The Matching Concept The Accrual Concept The Verifiable Objective Concept ...
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